Areas of Private Equity Targeted by Insurance Companies

by Joe Childs

  • 29 Sep 2009
  • PE

Preqin’s analysts recently conducted a survey of insurance companies to get an idea of their current view of the private equity asset class. We were particularly interested in the extent to which this type of institutional investor had altered its private equity plans as a direct result of the financial crisis and economic downturn of the last 12 months.

One of the questions put to survey participants was, “Which areas of private equity have you considered in the past but will be avoiding this year due to the current financial climate?” Perhaps unsurprisingly, the most popular response to this question was large or mega buyout funds, with 48% of respondents highlighting the strategy as one that they would shun in the next year. One East Asia-based company, while not seeking large buyout opportunities at the moment, expressed the belief that buyout would continue to be the most prominent and important strategy in the private equity industry going forwards. Other insurance companies would seemingly agree, with half of those we spoke to stating that vehicles targeting small to mid-market buyout opportunities would form a key part of their focus in the immediate future.

Distressed private equity, mezzanine funds and the secondary market were other areas of private equity that insurance companies believe to be presenting good opportunities currently. Other than large buyout funds, very few other private equity strategies were singled out by insurance companies as ones to avoid. Venture capital was the only other area that was highlighted by a significant number of firms, with 15% stating that they would avoid the strategy in the current climate despite considering opportunities to invest in this area in the past.

For more information on institutional investors in private equity, please see Preqin’s Investor Intelligence.

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